RKDA stock is surging higher after the company released a letter to shareholders on January 30, 2020.
Arcadia Biosciences, Inc. (Nasdaq: RKDA), a leader in science-based approaches to enhancing the quality and nutritional value of crops and food ingredients, released the following letter today from the company’s President and Chief Executive Officer Matthew Plavan.
Our 2020 focus is clear: We are committed to rapid revenue growth, while simultaneously building on our reputation in crop innovation to establish a market leadership position in hemp seed and extracts. I’m pleased to share some key milestones achieved in the final quarter of 2019, and contextualize the market-differentiating approaches we are taking towards our financial goals.
In just 50 days following the launch of GoodHemp, our new USDA-compliant seed line, we’ve received over $3 million in pre-season seed purchase commitments.
Revenues for these initial commitments will be recognized when the seeds are delivered to growers, between second and fourth quarter this year. With grower interest in our proprietary USDA-compliant seed line accelerating, we anticipate additional purchases over the next few months as farmers focus on securing quality genetics for their upcoming spring plantings. Revenues from these committed and expected future orders are in line with the greater than $10 million in total revenues for 2020 we forecasted to shareholders.
A vital element of our strategy to become the market leader in high-value hemp innovations is deploying the best breeding technologies in close partnership with the hemp grower community. We are essentially rapid prototyping novel non-GM hemp varieties that target quality and performance characteristics highly desired by growers to overcome their greatest challenges, while working directly with them in field deployment and monitoring to accelerate their speed to success.
This new proprietary discovery process – called ArcaTech – combines modern breeding science and genomics technology with real-time market intelligence from the field. Elite growers who enroll in our GoodHemp Innovation Partners program – located in six major hubs including Hawaii, the Pacific Northwest, Southern California, Northern California, the Desert Southwest and the Mountain West – will provide an invaluable feedback loop to guide our development strategies.
These developments are exciting, and just the beginning of our plans for this burgeoning industry. The strength of our scientific and agronomic foundations have positioned us to not only meet the acute demand for quality and compliant seeds from growers targeting the multi-billion dollar cannabinoid markets, but also to unlock the full potential of this plant through its numerous other applications in the industrial and food ingredient markets.
Before I close, I’d like to take a moment to highlight a significant milestone for GoodWheat. In December, Arcadia met initial commercial goals by recording first sales in two GoodWheat varieties optimized for resistant starch and reduced gluten. The limited first run of our Reduced Gluten Wheat Flour was sold online in two-pound bags and to date we have sold 90 percent of our available inventory, confirming interest from consumers avoiding gluten. We are now making commercial plans for this spring’s wheat harvest.
The inherent value of Arcadia is our unique combination of innovative, proprietary technology platforms and a track record of proven results in both the lab and the field. We are well-positioned for significant growth and market differentiation in 2020, with a focus on breeding innovation, grower collaboration and compelling commercial product lines. I am committed to frequent communication with shareholders, and encourage you to subscribe to our IR newsletter, The Messenger, for regular updates on our progress.
CEO, Arcadia Biosciences
What traders are focusing on is that Arcadia Biosciences has secured in excess of $3 million in initial seed purchase commitments in just 50 days post launch of its newest product line: GoodHemp. In comparison, the company did just $1.2 million in sales for all of last year. As Arcadia’s new commercial brand for delivering genetically superior hemp seeds, transplants, flower and extracts, GoodHemp debuted its first commercial product, a disease resistant, USDA-compliant ultra-low tetrahydrocannabinol (THC) hemp seed, during the American Seed Trade Association CSS & Seed Expo in Chicago.
“Our new GoodHemp seed catalog has been met with enthusiasm from growers seeking compliant, reliable hemp seeds,” said Sarah Reiter, Arcadia’s chief commercial officer. “Since our launch last month, we’ve received a significant number of inquiries, reflecting a strong market demand for quality genetics from a reputable seed provider. We can already see that Arcadia’s 15+ years of proven results in crop improvement is highly valued by growers,” she continued. “We are fielding strong interest in our seeds and expect purchase commitments to continue over the next few months as farmers focus on securing quality genetics for their upcoming spring plantings.”
Revenues from these initial purchase commitments will be recognized when the seeds are delivered to growers, between second and fourth quarter this year. This revenue and that expected from follow-on commitments will contribute meaningfully to the greater than $10 million in total expected revenues for 2020, as forecasted in the financial guidance provided by CEO Matthew Plavan last year.
GoodHemp’s 2020 offering has expanded from the five new seed varieties previously announced during the GoodHemp launch. The company now offers ten varieties primarily focused on compliant cannabidiol (CBD) production, one of the biggest challenges facing U.S. growers in light of the USDA’s new guidelines mandating that states test and dispose of “hot” crops that exceed 0.3 percent THC. The expansion in the 2020 seed varieties offered reflects the accelerated breeding platform and Arcadia’s advanced testing systems.
“We work closely with our community of U.S. farmers to understand the very specific challenges of growing hemp in different geographies, climates and regulatory environments in order to develop and deliver solutions that support crop productivity and profitability,” said Reiter. “Our USDA-compliant Complia Bot+ seed variety is just the beginning of what we expect will be a robust and innovative seed portfolio designed to modernize the commercial hemp germplasm market.”
To support the continued success of the GoodHemp line, Arcadia has established the GoodHemp Innovation Partners platform, a select group of growers who will work closely with Arcadia’s team of regional agronomists to further the shared understanding of GoodHemp seed performance at industrial scale throughout the production season. This unique go-to-market approach will be a hub model with centers initially in Hawaii, the Pacific Northwest, Southern California, Northern California, the Desert Southwest and the Mountain West. Innovation partners will receive exclusive access to the team of breeders, geneticists and computational biologists at Arcadia’s R&D headquarters in Davis, and serve as a hemp production advisory board highlighting grower challenges to inform Arcadia’s future breeding efforts. They will also have early access to developmental seed varieties and will help validate innovations under real farm conditions.